Jan 222012

Apple employs about 41,000 people in the United States. But virtually all of the parts for iPhones, iPads, iPods and other products are manufactured offshore — mainly in Korea, Taiwan, Japan and Germany.

And assembly is almost entirely in China, in regimented compounds operated by Apple’s suppliers. Thousands of workers, paid as little as $17 a day, shuttle between assembly lines and dormitories for 12-hour shifts six days a week. Suicides are common.  Critics espy a modern form of enslavement. You can read all about it in a long New York Times piece that started on Page 1 Jan. 22.

The contrast between Apple and chip-maker Intel couldn’t be more dramatic. Intel’s chip factories, or “fabs,” are all in the United States. Why? As an article about Intel’s newest “fabs” in today’s Financial Times explains, inertia is part of the answer. Intel has huge “fab” complexes in Oregon and Arizona, among others, and it is as much as 50% less costly to build next to an existing chip plant than to break ground at a “greenfield” site.

But another key reason is to protect intellectual property. Dan Hutcheson, semiconductor analyst at VLSI Research, told the FT:  “The huge advantage of keeping manufacturing in the US is you don’t have to worry about your IP [intellectual property] walking out the door every night.”

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